Rising inflation has led to marked slowdown in growth rates: HUL Chairman

HUL also said that notwithstanding these near-term challenges, the Indian FMCG sector offers significant potential for growth

High inflation in recent times has led to a marked slowdown in growth rates, Nitin Paranjpe, chairman of Hindustan Unilever (HUL), told investors in the company’s annual report. He added that India still remains one of the fastest-growing fast-moving consumer goods (FMCG) markets globally.

Paranjpe also said, “The recent slowdown notwithstanding, the penetration of FMCG products, both in urban and rural India, provides significant headroom for growth.”

As more people are entering the middle class, a large working population, increasing nuclear family structures, urbanisation and rapid adoption of technology all bode well for the growth of the sector in the country. 

He also said that the Indian consumer is evolving rapidly and the pandemic has accelerated several trends. It will continue to have far-reaching effects on the Indian consumer, which include an increased affinity towards holistic health and well-being. There will be a massive shift in the adoption of digital technology and more consciousness among consumers on sustainability and social equity.

“The Indian consumer is increasingly choosing superior products and brands that are also good for the people and the planet,” Paranjpe said.

Sanjiv Mehta, managing director (MD) and chief executive officer (CEO) of HUL said that in the near future, with geopolitical tensions and high commodity price inflation, the business environment will continue to be challenging. 

In its outlook, HUL said, “In the backdrop of a challenging operating environment this financial year, we dynamically managed our business to deliver strong bottom line performance. We grew our consumer franchise and made significant progress on our strategic priorities.” It added, “We will continue to take this approach in the financial year 2022-23 where the operating environment is expected to remain challenging with further input cost inflation and soft FMCG market growth.”

Mehta also said the last two years of the pandemic have made the company even more responsive and resilient as a business.

HUL is confident of outpacing FMCG market growth and maintaining margins at healthy levels. 

The company also said that notwithstanding these near-term challenges, the Indian FMCG sector offers significant potential for growth. “In the mid-long term, we will continue to create value for all our stakeholders by growing ahead of the market, delivering modest margin expansion and through disciplined use of capital,” the company said. 

During the year, the average increase in salaries of employees other than the managerial personnel in the financial year was 8 per cent. 

“In a post pandemic world, the workforce dynamics and employee preferences are changing rapidly with companies facing a very competitive talent market.

HUL has taken proactive reward and career-related measures to ensure our talent feels valued and maintain our competitiveness,” the company said in its annual report. 

The company has 8,480 permanent employees on the rolls as on March 31. Mehta took home Rs 22.1 crore, up from Rs 15.36 crore in the previous financial year.